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Tips for Building or Re-building Credit

June 6, 2017

What number follows you around as closely as your age? If you guessed your credit score, you are on the money. In simple terms, this influential digit is a rating of how likely you are to repay money borrowed, so it has a significant amount of power in many financial situations. Credit scores are most commonly utilized to help lenders determine loan eligibility and interest rates. As a direct reflection of your monetary habits, your score is unique and must be nurtured with sound financial practices.

Whether you are building your credit in anticipation of future lending needs, making a comeback after a rough period, or simply striving to maintain a strong score, be mindful of how your score is determined. A variety of factors are evaluated to give lenders a snapshot of the risk associated with entrusting you with a loan or other form of credit.

Payment History
Payment reliability proves financial stability. Regardless of your age, income, or current financial needs, paying expenses on time is one of the most influential factors that you can control.

Do: Ensure all bills - rent, utilities, credit cards, student loans, etc. - are paid consistently and on time each month to demonstrate an ability to successfully manage your money.
Don’t: Skip or delay payments.

Credit Ratio
Lenders look for balance. They want to know that you can utilize credit wisely and effectively.

Do: Monitor the ratio of credit available to you versus what is currently being used. You don’t have to be 100% debt-free to prove your credit worthiness, but demonstrate that you know how to manage debts responsibly. And, as you regularly repay what you borrow, you may be able to ask for a credit increase, which can also help your ratio.
Don’t: Treat credit like it is cash in your wallet. Use discretion when charging purchases to your credit card or taking out a loan.

Length of Credit History
Credit scores factor how long credit lines have been open and for what extent of that time they have been in use. This factor may be intimidating for those who are in the process of initially building credit, but this is just another way to prove dependability and will be considered along with other elements.

Do: Establish accounts that you can maintain long-term.
Don’t: Close lines of credit too soon after they are opened. If maintenance is manageable and annual fees don’t hurt your budget, keeping a line open but not utilizing it can work in your favor.

Credit Application Record
While not as important as the other factors mentioned, this is another area that illustrates stability. Help your score reflect your ability to find and maintain manageable credit options.

Do: Make informed credit-related decisions and shop around for options.
Don’t: Don’t sign up for any and every credit card. Discount offers may sound appealing with store credit cards, but the fine print may include hefty annual fees or significant interest rates. Opening numerous lines of credit in a short period of time could raise red flags and should be avoided.

Whether you are building or re-building your credit, remember it is a long-term investment in your financial future. Consistency over time is most important and will yield the best scores. While there is no overnight answer to boosting your score, daily decisions will make a difference. Strive for balance to build a foundation of credit worthiness. If you are interested in exploring specific options for your credit needs, enlist the assistance of your local financial institution.

Jim Oosterman is the Vice President of Melrose Bank. He can be reached by telephone at 781-665-2500, online at or on Facebook at

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